Top Down Analysis with Supply & Demand Zones | FULL COURSE PT 1 (2025)

Summary

In this video, the presenter breaks down key principles of effective trade management using a supply and demand trading strategy. He explains when to be aggressive or conservative with trade management, depending on factors like trend direction, higher time frame zones, and market conditions such as sideways price action. The video offers valuable insights on balancing risk-to-reward ratios, adapting strategies to different market conditions, and emphasizes the importance of trade management to maximize profits. Additionally, the presenter encourages viewers to learn more through mentorship and ongoing educational content.

Takeaways

• 📈 Begin every analysis with a top-down approach — start from the higher time frame to identify the overall market trend before looking for trades.
• 🔍 Identify whether the market is trending upward, downward, or sideways; trading with the higher time frame trend typically offers higher probability setups.
• 🧭 Draw clear and objective trend lines based on visible peaks and valleys — everyone should be able to agree on the identified trend direction.
• 🏗️ Mark key supply and demand zones on the higher time frame to understand where price might reverse or continue; these zones represent institutional buying and selling.
• 💡 Trade management should adapt to context: be less aggressive (allow trades to breathe) when trading with the higher time frame trend and no opposing zones are nearby.
• ⚠️ Be more aggressive with trade management when trading counter-trend or when price is near an opposing higher time frame zone to protect profits.
• 🧩 Aligning an entry time frame demand zone with a higher time frame uptrend (or supply with a downtrend) provides the best opportunities for larger risk-to-reward trades.
• 🪙 Counter-trend trades can still be profitable but should target smaller risk-to-reward ratios and tighter management since they go against the dominant momentum.
• ⚖️ Sideways or ranging markets are generally lower-quality conditions; in such cases, tighten trade management or avoid trading altogether.
• ⏱️ Use appropriate time frame combinations — for example, pair daily with 1-hour charts for swing trading or 4-hour with 15-minute charts for day trading.
• 📊 Understand that price action is fractal — the same patterns and behaviors repeat across all time frames, from minutes to days.
• 👨‍🏫 Consistent application of top-down analysis, along with dynamic trade management, helps traders improve risk-to-reward and confidence in execution.
• 🤝 The creator offers mentorship, community access, and additional resources for traders wanting deeper guidance on supply and demand trading.

Q & A

What is the importance of trade management in the context of supply and demand trading?

Trade management plays a crucial role in supply and demand trading. It helps you control risk, lock in profits, and avoid losing gains when the market moves in your favor. Effective trade management allows you to maximize potential rewards and minimize losses, especially when trading in counter-trend setups or near opposing zones.

When should traders be more aggressive with their trade management?

Traders should be more aggressive with their trade management when trading counter to the higher time frame trend, or when the entry time frame's zone is at an opposing zone of the higher time frame. This requires closer attention to price action and quicker adjustments to stop-loss and profit targets to lock in gains early.

Why is it risky to trade counter-trend setups, and how can traders manage these risks effectively?

Trading counter-trend setups is risky because the market is moving against the prevailing trend, which makes the trade less likely to succeed. Traders can manage this risk by being more aggressive with trade management, such as quickly moving stop-losses to break even after a price movement or locking in partial profits to mitigate the potential for a loss.

How can traders increase the likelihood of success in a counter-trend trade?

To increase the chances of success in a counter-trend trade, traders should focus on identifying strong demand or supply zones. They should also adjust their risk-to-reward expectations, opting for lower-risk trades with more active management, such as taking profits earlier or moving stop-losses to break even as the trade progresses.

What does it mean to be 'aggressive' with trade management, and how can it impact risk-to-reward ratios?

'Being aggressive' with trade management means quickly adjusting stop-losses to break even, locking in partial profits, or trailing stop-losses to secure gains as the market moves in your favor. This approach may result in a lower risk-to-reward ratio, but it reduces the chances of losing profits when the market reverses unexpectedly.

What role does time frame analysis play in managing trades?

Time frame analysis helps traders understand the broader market trend and pinpoint entry and exit points. By aligning trades with higher time frame trends and zones, traders can maximize profit potential. However, when trading counter to the higher time frame, or during sideways markets, traders must adjust their trade management to account for additional risk.

Why are sideways markets challenging for traders, and how can they approach trading in such conditions?

Sideways markets are challenging because there is no clear direction, leading to unpredictable price movement. In these conditions, traders should adopt more aggressive trade management strategies to quickly take profits or cut losses. It's generally not ideal to trade in sideways markets unless the trader is prepared for higher volatility and quick decision-making.

What are some key factors to consider when deciding whether to be aggressive or less aggressive with trade management?

Key factors include the alignment of the entry time frame's zone with the higher time frame's trend, the presence of opposing supply or demand zones, and the overall market structure. For instance, trading with the trend at a higher time frame zone may warrant less aggressive management, while counter-trend or opposing zone trades require more active trade management.

What should traders do when they encounter a trade near an opposing higher time frame supply or demand zone?

When trading near an opposing higher time frame zone, traders should be more aggressive with their trade management. This includes adjusting stop-losses quickly and locking in profits earlier to avoid significant reversals. These trades carry more risk because the higher time frame zone can quickly take control of price movement.

What time frame combinations are recommended for traders, and why?

For day trading, recommended time frame combinations include the 1-minute or 5-minute charts for entry, with the 15-minute or 1-hour chart for higher time frame analysis. For swing trading, a common combination is the 1-hour or 4-hour chart for entry, with the daily chart for higher time frame analysis. These combinations allow traders to capture price moves while aligning with the broader trend.